FIRST PERSON/OPINION By John Ulrich In the May 2010 issue of Cycle World magazine, former racer and Buell engineer Steve Anderson writes that new Harley-Davidson CEO Keith Wandell doesn’t understand sportbikes–asking employees why anybody would want one–and thinks racing is a waste of money. Wandell, a golfer who didn’t ride motorcycles when he was hired, was on the job about two weeks before he started de-railing subsidiary Buell, immediately canceling plans to construct a new, bigger factory building to replace the multiple rented buildings then in use, Anderson reports. Canceling the 1125R engine supply contract alone cost Harley-Davidson at least $10 million, which could have been offset by selling engine supplier BRP the rights to manufacture and sell (along with tooling for) the pending 1125-based B2 (or Barracuda 2) project, according to Anderson. In its fourth-quarter 2009 report, Harley-Davidson stated that it cost $167.1 million to shut down Buell. The company also paid Wandell $6.4 million for his first eight months on the job as CEO. For anybody interested in how the motorcycle industry in general–and Harley-Davidson specifically–actually works, Anderson’s piece is a must-read. But be ready to be disillusioned, especially if you’ve owned Harley-Davidson stock since the IPO like I have, because it quickly becomes clear that all is not well at The Motor Company. Above all, this is a cautionary tale: History has shown that hiring a non-motorcyclist to run a motorcycle company never ends without collateral damage, and often ends with fundamental structural damage. And no, hiring a Boeing executive to run Ford is not the same thing, because at least in that case the new boss had driven and understood cars; reports that he asked employees why anybody would drive a Mustang haven’t filtered out of Ford. In this case, Buell finally had a legitimate sportbike contender in the pipeline. But instead of embracing and capitalizing on a market segment that has long yielded strong results for a number of other motorcycle companies around the world, Harley-Davidson squandered the chance to appeal to more than aging baby-boomers. With the decision to concentrate on building the same type of cruisers it has sold to the same aging customers in a market artificially propped up by various factors well-explained by Anderson, Harley-Davidson missed a chance to maximize long-term shareholder value. Here’s hoping it hasn’t also turned down the path to its ultimate extinction.
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